Most of the PPP projects facing problems because of the greed of the Promotors(Private). They want to kill the goose rather than collecting the eggs. They are raising the costs with artificial numbers and pushing the government to allow their exorbitant charges on the users. This is causing unrest in the public against future projects in PPP. Some BIG companies are playing with numbers to evade the government share in the profits by articifially showing loses or by cost manipulation.

Many of such PPP projects are really financially viable. However, the PPP entity loses money because the private firms in collusion with public servants and politicians try to get the profits out too early and reduce the risks. For example, Delhi airport passengers charges are one of the highest in the world. It is so high that the airlines are getting sick and budget airlines are refusing to fly to India. Ideally it the special puspose vehicle should not lose money. However, tt may be losing money with artificially inflated costs. When valued with the cheap land lease in the vicinity of the airport, the promoters seem to have made a huge profits.

PPP is not the solution to any problem. No private player will pay for a country's infrastructure development. It is the governments job and it is funded by tax payer money. Delhi Metro is a public sector initiative and is very successful. Delhi Airport is on PPP model and has ruined the aviation sector in Delhi. While the airport is good to look at, the expensive airport charges mean high passenger taxes, flight charges, less flights coming to Delhi, almost no low cost flight options available, less tourists and less development. Reliance took over the government funded Airport link metro and refused to run it after 3 months because it wasn't so profitable for them. So who is suffering? The people.

We are sick of paid articles anyway, please dont let Economist become one of the paid news channels as well. PPP is not the answer.

The PPP is not the panacea for development - but it sure is the best way forward. What we / Government need to do is to facilitate and assist this in every manner possible. Sure - there will be hiccups; sure there will be hurdles -- but these need to be dealt with positively; allow due process and reduce government involvement. Let there develop independent systems and 3rd parties to arbitrate and decide issues judiciously. What we are experiencing is purely the infancy stages of full fledged evolution of capitalism. Laissez Faire. Let the free market prevail - and water will find it's own level. Please please eliminate the government from involvement.

In my personal opinion, I don't think India's infrastructure will ever be upto the mark, because of massive failures in policy making, lack of determination and passion, there seems to be a complete disdain in the approach to improve the basic infrastructure, it's as if the culture revolves around this notion that they deserve only the worse and no one (especially the government) wants to rise and lift the standard of living of its own people.

A very fine point is raised that the government contracts are not followed and often the rules are bent to favor a few. It is high time now that the corruption is tackled head on. Ratan Tata has rightly pointed out that the environment is not conducive for business. But it is not conducive only for the ethical.

PPP appears to have been a fad of the 1990's which increasingly around the world is an idea that is now being called into question. For certain projects it would prima facie seem to be an easy solution. On clearer analysis you would find that although it may work say for toll roads or bridges, it is difficult to see how it could be made to work for say sewers, storm drains or similar projects where the immediate benefits are not altogether obvious. In the long run I still think governments should focus on raising taxes efficiently, know-how from the private sector could be valuable, however ultimately the government has to find some way of executing infrastructure projects cost efficiently and running them properly. A transparent accountability really is the key. With the rapacious culture among Indian politicians and their history of bungling up public projects what need to be found is a way to get public servant to carry out their duties, without assuming that the problems would necessarily go away once they are handed over to the private sector.

I guess the root cause of this slowdown on all projects is naively avoided by the author. Coal, mining, telecom, aviation, automobile, textile, power, sports... there is no industry where Govt has not interfered & tried to regulate in last 4~5 years and now reaping the fallout of the same. The strong will which this Govt is reflecting to revive things in last 4/5 months was missing all the way thru. Corruption is not the fundamental issue...infact its a part of every mega project in almost all the countries.. its the will of the Govt to get things done thru right policies.

the article is on the delayed projects and the non-profitability of the finished ones... discussion on corruption may require a separate topic! Infact if the will would be strong to make more money then success of these projects would have thrown more opportunities of smart corruption... but sleep was the priority!

Any big country needs such mega projects considering their 30~40 yrs of useful life, here author has smartly avoided drawing a parallel with any other mega projects of the world which has become profitable with-in 3 years of operations. The format can be any (PPP or state) but fundamentally it requires subsidy/support by the Govt only considering their strategic importance in the growth of the country !

Let us be clear. India is not the only country going through various hassles in its efforts to improve infrastructure. PPP was an attempt to ensure faster completion of projects. Though it has not been a success, it is not a spectacular failure either, as some of the projects would show. Different models need to be tried out and in that regard one should laud India. Yes, there could be delays in the process. Some fine tuning may be required.At the end of the day, if it is beneficial to the country at large then it should be welcome.

The problem are not about whether PPP is a better system or some other system is better. The problem is with corruption and incompetence.

Unless corruption is sorted out, no system can do anything.

Taking Delhi Metro as a success is not the best example, it is more like an exception. Before E. Sreedharan came in, even Delhi Metro was stuck in red tape -- it was under consideration since 70s! Now that he's gone, only time will tell what will eventually happen to DMRC. Luckily, he presided over the two most crucial phases and part of Phase 3.

I don't hear as kind words about the various other metro rail or other projects. It is still a pleasant mystery how Delhi Metro projects were executed within time and budget, in an environment that is otherwise steeped in corruption and incompetence.

If corruption was the major problem, China wouldn't have built so much infrastructure so quickly. There is no evidence to suggest that corruption is any less in China. It is not the major problem. Red tape, delays over clearances and land acquisition and environmental clearances, judicial action halting projects raising costs until they have to be abandoned - all of these are the major problems. In the current mood of anti-corruption frenzy, Indians have started attributing all problems to corruption! This mindset itself is becoming the problem.For example, if the government tries to do anything to help the private infrastructure firms who are struggling with unviable contracts, activists will allege corruption and rush to the courts to stop this. This type of frenzy and hyper-activism is itself a problem.

China was very lucky to have a benevolent leadership. Their top leadership is committed to world class development unlike ours. It is this leadership that has driven their projects at unprecedented speed. Chinese are also committed to punish corruption, even by death penalty as they understand how damaging it can be.

In a democracy corruption is corrosive. It results in not just monetary loss, but it also kills the will of politicians, government officers, police, judiciary, etc. to focus on development. All their decisions are driven by how much they will benefit personally, and development is only a by product. No wonder the infrastructure we have is also of shoddy quality. The fact that India is still underdeveloped is because of corruption.

We must get out of this mindset that corruption is inconsequential and is only a minor irritant. You pick up almost any issue -- from development to Kashmir problem to spreading Maoism, you will invariably find the hand of corruption there as one of the important causes.

I didn't say corruption is inconsequential - I agree its a very major problem - its the most direct manifestation of the absence of a rule of law in India. I just said it is not the major reason why India doesn't succeed in building infrastructure. The tendency to argue that corruption is the only or the primary problem in India is misleading because most poor countries are equally corrupt - yet these other poor countries had better infrastructure and better social indicators than India. In China, there is massive large scale corruption in infrastructure projects. Even a typical mid level Communist party official has millions of dollars and many mistresses apart from his family. Senior Communist Party officials typically have hundreds of millions of dollars stacked in Western bank accounts. The level of corruption is monumental because there are no checks and balances, not even free or partially free media. If you talk to the Chinese people, they will say the same about corruption as we do. Yet China has great infrastructure, while India has crap infrastructure. Why? The answer to this question doesn't lie in corruption, it lies in other things.

And God knows what you mean by corruption being "sorted out". If India is waiting for corruption to get "sorted out" till it tries building infrastructure, then it will be waiting for a very long time. We cannot wait one problem to be sorted out before targeting others.

When you cite China example, do factor in that they are not a democracy. They are dictatorial, and luckily for Chinese, the dictators are committed for development. That is how they have development along with corruption.

Take a look at any report from Transparency International -- there is a strong inverse correlation between corruption and development in most countries. And the reasons are not hard to understand.

In fact, if you say that corruption and development can co-exist, then you will need to explain how. Citing China example is not enough.

Also remember that our ideal developmental models should be countries like US, European countries, Japan and not countries like China and Saudi Arabia even if they appear developed.

Yes, i do agree, the structural framework and environment in India now looks so fishy and lacks transparency, any infrastructural project is either riddled with controversy or is a failed one financially.even the african experience are far better.

Dictator is the wrong word. China leaders are not inherited or family related. The prime ministers were selected by the party members. You can say Chinese government is an one party monopoly but it is far from family dictatorships like NK and the middle east.

India has to be careful if they want to follow the models of US, Europe and Japan. These countries are all in heavily in debt.

I agree with Ankur172,the problem in India is corruption by the politicians.Some time they concieve projects for making money and not for serving the communities. The recent scam investigations explain the dismal situation we are in in implementation of projects in the country,lack of accountability in all fields right upto parliament level.